FSCA makes progress in cleaning up the financial services sector

Financial Sector Conduct Authority (FSCA) Commissioner Unathi Kamlana and head of enforcement Gerhard van Deventer had a clear message for service providers in the financial industry when they presented a report on the agency’s work over the past year: Obey the rules or face the consequences.

The numbers show that the institution acted decisively against those who refuse to toe the line. It imposed 51 administrative penalties totalling nearly R120 million.

Read:
Missing broker, missing money
FSCA warning against unauthorised CPD providers

The guilty parties received fines ranging from a few thousand rands to several penalties amounting to R68 million against persons of a single entity who had invested their clients’ funds in an unregulated venture capital fund.

These wrongdoers informed their clients that the funds had been invested in unit trusts – then falsified the investment statements.

The three offenders involved in this scam were debarred from the financial services industry for 30, 20 and 10 years respectively. The FSCA also withdrew their operators’ licences.

In total, the FSCA debarred 131 individuals from working in the financial services sector during the year to end March 2025, suspended 24 licences and withdrew 382 more, issued 13 directives and entered into 14 enforceable undertakings after finalising 633 investigations.

Read:
Financial advisor debarred, fined R1.1m by the FSCA
FSCA withdraws Banxso’s FSP licence

Over 90% of the licence withdrawals were due to non-submission of statutory returns.

Most debarments stemmed from dishonest conduct regarding the submission of false policies.

Directives primarily addressed anti-money laundering contraventions such as failure to report transactions as required by the regulations.

Warnings

In addition, the FSCA issued 107 public warnings – an average of more than two each week; with single warnings often addressing several scams and offenders.

These public warnings were mainly issued due to unauthorised or unlawful activities – mainly involving unlicensed entities offering investment or trading opportunities, or masquerading as celebrities, and the false use of the identities and numbers of financial services providers (FSPs) and FSCA personnel members.

Almost all of the warnings were aimed at wrongdoers running scams offering victims unrealistic returns, using fake media articles and video clips, and posing as established financial companies.

The FSCA even had to issue a warning about a group of criminals impersonating Kamlana.

Both Kamlana and Van Deventer emphasise that consumers need to be more cautious and act responsibly when confronted with obvious scams.

Listen: FSCA update: Signals, impersonations, and deepfakes

“If financial customers heed the warnings to avoid unregistered operators, they can significantly reduce their exposure to scams,” says Van Deventer, pointing out that malfeasance in the regulated financial industry is not a common occurrence.

“It is important to note that the misconduct highlighted in the report represents only a small fraction of an otherwise largely compliant industry. I believe the FSCA’s enforcement activities have been effective.”

The FSCA takes a staged approach to ensure compliance as it offers support to rectify smaller, less serious offences. However, Kamlana says the FSCA started to notice that individuals were taking advantage of the leniency and therefore the institution began enforcing stricter measures.

“In cases of serious misconduct and harm to financial customers, the FSCA imposes debarments to ensure that those responsible are removed from the financial sector,” says Van Deventer.

“These actions often lead to the withdrawal of licences, helping to cleanse the industry of bad actors.

“As a result, the FSCA’s enforcement focus is increasingly directed at regulated entities. The aim is to ensure a secure and trustworthy financial services industry to prevent harm to clients.

Legal confirmation

The FSCA report highlights several instances where those on the receiving end of enforcement action approached the courts to try and fight the FSCA.

Their grievances included, among others, legal objections against the FSCA’s procedures and/or jurisdiction as well as appeals against the authority’s decisions.

Van Deventer says the courts ruled mostly in favour of the FSCA, which strengthens its position.

“The FSCA successfully defended its supervisory and enforcement powers. These judgments affirm the lawfulness and constitutionality of the FSCA’s authority, and now serve as important legal precedents for any future challenges. The FSCA welcomes these outcomes and views them as a valuable endorsement of its regulatory mandate.”

Read: FSCA beefs up to take down online scams

The FSCA says it is slowly winning the war against illegal activity but warns consumers that criminals are continuously improving their online and social media “products”.

“The rise in online harm is a global phenomenon, significantly enabled by advances in technology,” says Van Deventer.

“Cross-border enforcement presents unique challenges, but the FSCA is actively collaborating with international financial regulators to address these threats. However, enforcement alone is not sufficient. To strengthen its efforts, the FSCA is also engaging with social media platforms – both locally and through its membership in the International Organisation of Securities Commissions – to develop and implement anti-scam initiatives.

“The widespread reach of social media has elevated this issue to a top enforcement priority. The FSCA continues to educate and warn consumers about scams and collaborates internationally with other financial regulators to combat this threat. These efforts contribute to poverty reduction by empowering the public to avoid financial scams.”

The Hawks

The FSCA notes in the report that it has expanded its cooperation with the South African Police Service (SAPS) – particularly the Directorate for Priority Crime Investigation, commonly known as the Hawks. It has also strengthened its relationship with the National Prosecuting Authority (NPA).

“These partnerships are critical to ensure visible enforcement and credible deterrence,” says Kamlana.

“The FSCA remains committed to supporting the SAPS and the NPA in matters under criminal investigation and prosecution.”

Listen: FSCA to invest R200m to build up its regulatory muscle

During the 12 months under review, the FSCA referred 40 cases to the SAPS that fell within the jurisdiction of the criminal authorities and therefore did not undergo full investigation by the FSCA.

It is currently assisting with five active criminal investigations and prosecutions.

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.